(Adds quote, divisional earnings breakdown, Officeworks IPO)...

(Adds quote, divisional earnings breakdown, Officeworks IPO)

Australian retail-to-mining conglomerate Wesfarmers Ltd (WES) posted its highest first-half profit in more than a decade on Wednesday, as higher sales in its home-improvement unit offset declining earnings from Coles, the country's No. 2 supermarket chain.

Net profit for Wesfarmers, Australia's biggest company by sales, rose 13 percent to A$1.58 billion ($1.21 billion) for the six months to the end of December, better than the average forecast of A$1.51 billion from three analysts polled by Thomson Reuters I/B/E/S.

Coles, which generates about 40 percent of Wesfarmers's earnings, saw half-yearly earnings before interest and tax slide 2.6 percent, including one-off gains from asset sales. Excluding those one-offs, Coles earnings dropped 6.8 percent, Wesfarmers said.

"In the short term, margin pressures are expected to persist as the focus remains on delivering customer value in a competitive market," the company said in a statement, referring to Coles. It did not offer guidance for the 2017 full fiscal year.

Wesfarmers and Coles's larger rival, Woolworths Ltd (WOW), have been shutting down and selling non-core assets as the duopoly tries to slow the incursion of new discount competitors like Germany's ALDI Inc [ALDIEI.UL] in the A$100 billion grocery sector.

A price war between Coles, Woolworths and their newer competitors has also sent ripples through Australia's economy, with the headline consumer price index missing forecasts by growing just 0.5 percent in the December quarter, partly due to soft retail sales. Woolworths reports interim earnings next Wednesday .

In November, Wesfarmers said it was considering selling its coal mines in a deal that sector participants said may fetch A$2 billion. On Wednesday, the company said earnings from its "industrials" unit, which includes coal mines, leapt to A$377 million from A$22 million from the prior first half, as a result of rising coal prices .

The company added that it was still reviewing its coal assets and there was no certainty of a sale.

It added that it is considering an initial public offering of its stationery retail unit, Officeworks, whose earnings grew by 5.1 percent to A$62 million.

Wesfarmers is meanwhile expanding its home improvement business, Bunnings, which entered Britain last year by buying Homebase Group Ltd [HMBGR.UL] for about A$700 million. Home- improvement earnings rose 3 percent in the half-year, including restructuring costs in Britain.

Wesfarmers posted results a day after reporting that it promoted the head of its resources, energy and fertiliser division, Rob Scott, to group chief executive officer. He succeeds Richard Goyder, the CEO of 12 years, who previously said he was planning to quit.

The company posted results before the start of share trading on Wednesday. ($1 = 1.3063 Australian dollars)